Murdoch: Hughes deal to 'transform' Fox

New York — News Corp. chairman and CEO Rupert Murdoch expects to wrap up the takeover of satellite TV giant Hughes Electronics in the coming weeks and is looking for the deal to change forever the conglomerate's U.S. arm, Fox Entertainment Group.

"It will be a transforming event," Murdoch said Tuesday at Fox's annual shareholder meeting in New York. "The Fox Entertainment Group will become one of the premier U.S. TV entertainment providers."

Talking to reporters after the meeting, Murdoch also signaled that he could live with a compromise on media ownership rule changes that would allow a broadcaster to reach 39 percent of the nation's TV audience.

"On the face of it, it suits us just fine," he said. During the shareholder meeting, he had detailed that the Fox stations reach just shy of 40 percent of the U.S. market. The White House and the Republican leadership in Congress had agreed on the 39 percent station cap compromise late Monday (HR 11/25).

Meanwhile, Peter Chernin, president and chief operating officer of News Corp. and Fox, said he was "optimistic" that Fox Sports could finalize a new carriage deal with Cox Communications "reasonably soon." Calling recent discussions "fruitful," he hinted that there were not "any snags" left. Chernin declined to discuss specifics.

Discussing the Hughes deal in more detail, Murdoch called it "the most exciting event of the past year" for Fox, adding that the old "content is king" mantra isn't enough anymore given continuing consolidation of the content distribution sector.

"With growing consolidation in the distribution business, it is very important to get into that and have both — content and distribution," he said.

The media mogul declined to discuss what conditions, if any, he would have to accept to wrap up the Hughes transaction amid talk that the FCC may want to prevent him from luring new subscribers to Hughes unit DirecTV by strong-arming cable operators in carriage talks with Fox networks.

Murdoch did, however, renew his vow to take on cable operators. "DirecTV will offer unprecedented competition against the cable companies," he said.

Management's first priorities after the takeover will be to improve consumers' experience with DirecTV by offering more local channels, new technological features such as digital video recorders and strengthening customer service.

After the recent announcement that current Fox TV station group head Mitchell Stern will join DirecTV in a senior role, Murdoch said he felt that "we have the main elements of the (management) team in place" with possible further changes likely to come only once News Corp. has been controlling Hughes for a while.

Murdoch on Tuesday once again touted the conglomerate's strong results for its fiscal first quarter as well as the last fiscal year, which had seen record profits in the film, TV and cable network units. They also expressed confidence that financial momentum will remain strong in the current fiscal year.